In November 2016, the Brunswick Company signed two purchase commitments. The first commitment requires Brunswick to purchase 10,000 units of inventory at $10 per unit by December 15, 2016. The second commitment requires the company to purchase 20,000 units of inventory at $11 per unit by March 15, 2017. Brunswick’s fiscal year-end is December 31. The company uses a periodic inventory system. Both contracts were exercised on their expiration date. Required: 1. Prepare the journal entry to record the December 15 purchase for cash assuming the following alternative unit market prices on that date: a. $10.50 b. $ 9.50 2. Prepare any necessary adjusting entry at December 31, 2016, for the second purchase commitment assuming the following alternative unit market prices on that date: a. $12.50 b. $10.30 3. Assuming that the unit market price on December 31 was $10.30, prepare the journal entry to record the purchase on March 15, 2017, assuming the following alternative unit market prices on that date: a. $11.50 b. $10.00

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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In November 2016, the Brunswick Company signed two purchase commitments. The first commitment requires Brunswick to purchase 10,000 units of inventory at $10 per unit by December 15, 2016. The second commitment requires the company to purchase 20,000 units of inventory at $11 per unit by March 15, 2017. Brunswick’s fiscal year-end is December 31. The company uses a periodic inventory system. Both contracts were exercised on their expiration date. Required: 1. Prepare the journal entry to record the December 15 purchase for cash assuming the following alternative unit market prices on that date: a. $10.50 b. $ 9.50 2. Prepare any necessary adjusting entry at December 31, 2016, for the second purchase commitment assuming the following alternative unit market prices on that date: a. $12.50 b. $10.30 3. Assuming that the unit market price on December 31 was $10.30, prepare the journal entry to record the purchase on March 15, 2017, assuming the following alternative unit market prices on that date: a. $11.50 b. $10.00

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